Correlation Between Bunge and Fresh Del

Can any of the company-specific risk be diversified away by investing in both Bunge and Fresh Del at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bunge and Fresh Del into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bunge Limited and Fresh Del Monte, you can compare the effects of market volatilities on Bunge and Fresh Del and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bunge with a short position of Fresh Del. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bunge and Fresh Del.

Diversification Opportunities for Bunge and Fresh Del

0.54

Correlation Coefficient

Bunge  Fresh Del

Very weak diversification

The 3 months correlation between Bunge and Fresh is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Bunge Limited and Fresh Del Monte in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh Del Monte and Bunge is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bunge Limited are associated (or correlated) with Fresh Del. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh Del Monte has no effect on the direction of Bunge i.e., Bunge and Fresh Del go up and down completely randomly.

Pair Corralation between Bunge and Fresh Del

Allowing for the 90-day total investment horizon Bunge Limited is expected to under-perform the Fresh Del. In addition to that, Bunge is 1.58 times more volatile than Fresh Del Monte. It trades about -0.04 of its total potential returns per unit of risk. Fresh Del Monte is currently generating about 0.01 per unit of volatility. If you would invest  3,079  in Fresh Del Monte on January 13, 2025 and sell it today you would earn a total of  17.00  from holding Fresh Del Monte or generate 0.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bunge Limited  vs.  Fresh Del Monte

Bunge Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bunge Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical and fundamental indicators, Bunge is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Fresh Del Monte

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Fresh Del Monte are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable fundamental indicators, Fresh Del is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Bunge and Fresh Del

The main advantage of trading using opposite Bunge and Fresh Del positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bunge position performs unexpectedly, Fresh Del can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fresh Del will offset losses from the drop in Fresh Del's long position.

The idea behind Bunge Limited and Fresh Del Monte pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.